Tuesday, July 26, 2016

I chatted with Mike Owen Benediktsson, an urban and cultural sociologist and professor at Hunter College, about Storefront Survivors, a vital research project and online resource about small, independently owned storefront businesses trying to stay alive in a city that has become increasingly hostile to their presence.

all photos courtesy of Mike Owen Benediktsson

Q: What is the "Storefront Survivors" project? A: The project is a collaboration between three CUNY urban sociologists – Sharon Zukin of Brooklyn College, Rich Ocejo of John Jay, and me. All of us were teaching this really interesting seminar about the city’s neighborhoods at Macaulay Honors College this spring.

Our students talked to more than 140 business owners in dozens of neighborhoods across all five boroughs, gathering a variety of material – transcripts, audio recordings, images, etc. – a portion of which is gathered at the Storefront Survivors website.

The motive for this was partly pedagogical and partly our own sociological curiosity. Having our students interview small business owners turned out to be a great way to humanize some of the abstract issues that we were talking about in class – topics like gentrification, immigration, ethnic succession, and urban planning. By going out into unfamiliar neighborhoods and talking to people affected by these issues, our students could gain some traction on the themes in the class, and in the process, help to tell stories that need to be told right now, through the website.

Q: What inspired you to do it?

A: In a broader sense, we were inspired by mountains of research that suggests that small, independently owned businesses have important payoffs for urban communities. Some of these spillover effects are easily measurable. For example, the evidence suggests that small businesses are vital for job creation – much more so than chains, or other large corporations. When you narrow the focus to the immigrant labor force in a diverse place like New York, these benefits are magnified. Small storefront concerns often provide a foothold in the economy for immigrant workers who might otherwise be marginalized and excluded.

Sociologist Ray Oldenburg famously argued for the importance of “third places” – low key, unassuming cafés, bars, restaurants, and shops. These places can serve a particularly vital role in diverse urban communities, bringing people together on an even playing field, and giving them something to talk about. They have a leveling effect and help to build social networks. This kind of capacity only becomes visible from up close.

To be clear though, not all small, independently owned storefronts serve this romantic role. Some businesses divide people along lines of class, or consolidate interaction within an ethnic group. But many longstanding storefronts do have these positive spillover effects for social cohesion or tolerance in a community. And when the businesses are displaced to rising commercial rent or competition with online retailers, neighborhoods lose these little bastions of stability and civility that are hugely important to the urban fabric. So, beyond the economic and cultural benefits of small businesses, they also do something socially vital, and this inspired us to document their struggles.

Q: Can you address the defense of corporate chains, which I often hear, that goes: "Corporate chains are good for a city because they give poor, unskilled people a place to work"?

A: That’s really an economic question. The research I’ve read in urban economics suggests that an area loses overall retail employment in a given industry when a chain comes in, because mom-and-pops are forced to close or downsize their operations, and they end up laying off more people than the chains hire.

The argument that chains provide jobs seems to arise specifically in order to justify a controversial zoning change, or a big, as-of-right commercial development. The problem with this logic in the case of, say, hardware and home improvement, is that you have to weigh the expected contribution of a new big-box store against the jobs that will be lost when all of the small, independent hardware shops within a five-mile radius close.

There’s a sleight of hand at work when a big chain store promises to create 100 or 200 jobs, and this promise is taken at face value, without looking at what competition will do to local independent retailers.

Big chain stores are profitable for shareholders in part because they capitalize on economies of scale, selling goods for lower prices but also employing fewer people than would be necessary to sell the same goods in a bunch of geographically dispersed mom-and-pop shops. So, although my students’ research did not directly address this question, I’m skeptical of these arguments.

Q: What themes emerged in your students' research?

A: Our students didn’t go looking for stories of hardship. They actually were just looking for businesses that had been around for at least a decade. But it became immediately clear how difficult and also how complex the commercial landscape is for independent storefronts in the city right now. Escalating rent was a constant theme, but so were property taxes, punitive or cumbersome government regulations, the erosion of a customer base in rapidly changing neighborhoods, tooth-and-nail competition against chain stores and online retailers, and so on.

The stories contain pretty clear takeaways in terms of the survival strategies of businesses that had managed to stay in the black for decades.

Q: How are small business coping with the massive rent increases we’re seeing today across the city?

A: Unfortunately, the only way for a small business to survive a massive and abrupt increase in rent is to relocate. Roughly a third of the longstanding storefronts my students studied had been displaced at some point in the last 10 years, but had managed to stay fairly close by. They’ll often fight really hard to stay local, we learned, because they hope to retain at least some of their existing customer base.

Another third or so are currently staring a big rent increase in the face, which is tragic when you’re talking about a business that has been in the same neighborhood for 15 or 20 years or more, that is financially viable, and that people seem to love. Our students were looking for success stories, but there was a bittersweet quality to almost all of them. There’s this Italian café on the LES that is typical – it opened 35 years ago and thrived in the same location until 2008, only to be bounced a few blocks away due to a big rent hike. Now the owner has three years left on her lease and told one of my students, “Realistically when my lease is up, my business is over.”

So, even though my students were actually looking for stories of resilience that could inform and inspire other business owners, a lot of what they ended up documenting is the fragility of small enterprise in the path of gentrification.

Q: Other than an affordable rent, what helps a small business survive in the current urban climate?

A: Expanding and diversifying is one major way a small business might weather tough times. The video store guy in Queens who used to specialize in Bollywood DVDs now sells printing equipment and cell phone accessories. The Jewish deli owner who could formerly count on locals and regulars to walk in the door and fill his cash register now does much of his business catering Bar Mitzvahs, and even ships pastrami sandwiches out of state through his website.

This kind of thing can keep a storefront going and even make it wildly successful. But it entails a changing connection between a business and the community around it. A lot of the business owners we talked to had developed an online presence, either moving part of their business onto the Internet, or relying heavily on Yelp and social media for marketing. This signals a transition from word-of-mouth, which is localized and personal, and serves as the marketing currency of ethnic enclaves, to an approach that is impersonal and targets a broader clientele.

For example, spend half an hour in the waiting room of Repairs On Wheels (in my estimation the best repair shop in Brooklyn) and you will witness this crazy combination of old world and new world – elderly Hasidic men from down the street who have been bringing their car in for decades and have never heard of social media, and young Brooklynites from gentrifying neighborhoods on the other side of the borough who were attracted exclusively by Yelp reviews from people who look and sound like them. The owner and his uncle are really good at what they do, and you can watch them code switching all day--they have one way of dealing with their local customers and another way of dealing with people from outside the neighborhood.

Another thing is that a number of the longstanding business owners, it turned out, had at some point scraped together the resources to buy the space they occupied. Again, not too surprising. Advocates for small business have pointed to this as an important factor – it insulates business owners against rent increases and provides equity and collateral. But what we saw is that it also introduces an interesting dynamic. Commercial landlords who are also small business owners can have a different outlook than property owners who are in it strictly for the real estate. They are more invested in the character of the place, and the characters in the place.

But this can work in either direction, depending on how business owners view their role as property owners. In some cases, they act to insulate other independent businesses against gentrification. There’s an independent hardware store owner in Queens whose own business is in jeopardy because he refuses to raise the rents on the other commercial tenants. On the other hand, the Pintchik family in Park Slope, as independent business owners, run one of the quirkiest, most endearing hardware stores you can imagine. But as owners of a massive swath of Fulton Avenue, they ended up embracing upscale boutiques and chains.

The last strategy, and I think in many ways the most important, is getting political and getting organized. Dozens of the storefront survivors that our students talked to had become involved in civic organizations and campaigns, and were able to protect themselves through advocacy and activism. Our students interviewed a florist in Queens who led the fight against a new Home Depot, a barber in Flatbush who faced off against the mayor over excessive fines leveled by city inspectors, and a discount store owner who created a Bangladeshi local business association.

It’s important to realize that merchants’ associations, unlike business improvement districts, which are run by property owners, specifically represent local storefronts. There is strength in numbers, and they can organize against landlords or city agencies that are causing trouble for their members. Two of the Manhattan business owners interviewed by our students are members of the three or four-year-old East Village Independent Merchants Association (EVIMA). If successful, an organization like this could do a lot to stabilize the commercial identity of an area and preserve local character, simply by helping independent business owners pool their resources and provide a strong collective counterweight to the state and market forces that uproot independent storefronts in this city at an alarming rate.

But, again, the reality is that none of these strategies can help a business respond to a quintupling or a 10-fold increase in rent. That is pretty much a guaranteed deal breaker no matter how well you’ve been running your business over the decades, and is probably an indication that the landlord simply wants you gone.

2 comments:

Good article with good advice on staying in the black by changing with the times. but as the professor explained, if the landlord wants a big box chain, there is nothing you can do to survive those impossible rent increases! Unfortunately, as the students discovered, many small business owners still don't see a bright future ahead and that means we have more closings of unique New York business to look forward to.

It must be very discouraging to try to build a business and a loyal customer following with this "sword of damocles" hanging over your head. My heart goes out to them.

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